Direct Cash Payments to Business May Advance Economic Development & Expand Renewable Energy Use

energyOne new development on the national energy initiative for business owners and the self-employed got my attention!  With few businesses seeking tax credits, many renewable energy developers are expected to opt instead for direct federal payments.

The Department of Energy and the U.S. Department of the Treasury are now accepting applications from renewable energy project developers that wish to receive direct federal payments in lieu of tax credits. The direct-payment program is meant to address a lull in demand for federal tax credits, which has hampered the financing of renewable energy projects.

Since the economic downturn began, renewable energy projects have had a more difficult time obtaining financing, slowing the rate of new renewable energy installations. To help remedy this situation, DOE and the Treasury Department estimate that they will distribute at least $3 billion in direct payments to about 5,000 facilities using biomass energy, solar energy, wind power, and other types of renewable energy. The funding for this effort is made available through the American Recovery and Reinvestment Act.

The Recovery Act authorized the Treasury Department to make direct payments to companies that create and place in service renewable energy facilities beginning January 1, 2009. Previously, these companies could file for a tax credit to cover a portion of the renewable energy project’s cost; under the new program, applicants would agree to forgo future tax credits in favor of an immediate reimbursement of a portion of the property expense. DOE will assist the Treasury Department in implementing this program by reviewing the technical merits of the applications.

The two agencies expect many businesses to apply for the direct cash payment in lieu of the tax credit, providing an immediate stimulus for local economies. To apply for the program, visit the program Web site at

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